Global markets remained relatively subdued on Monday in advance of President’s Day, a U.S. bank holiday that will keep markets closed. Traders kept their eyes on oil prices, which rose slightly across the board during Monday’s Asian session. Traders remain concerned as to whether the U.S. increase in drilling rigs would undermine OPEC’s commitment to cut production, which is currently standing at a 90 percent compliance rate.
U.S. energy companies increased oil rigs for the fifth consecutive week, spurring expectations that U.S. oil production could increase by 405,000 barrels per day from the fourth quarter of 2016 until the fourth quarter of 2017, a measure that could counterbalance OPEC’s efforts and keep prices lower than hoped.
Chinese independent refiners have begun importing heavy crude from North America, both from the United States and from Canada, following production increases in the region. Heavy crude is valuable to refiners because its lower cost allows for higher margins once the fuel is refined and produced for broader use. OPEC’s production cuts are currently focusing on mostly heavy and medium grades of crude oil, which opens the door for the U.S. to provide these commodities to countries in need, including China.
U.S. WTI crude ended the session at $53.58 per barrel on Monday, up 19 cents since tis close, while Brent futures gained 23 cents to trade at $56.05 per barrel.
Asian Markets Close Higher
Asian markets closed largely higher on Monday as traders await news about U.S. President Donald Trump’s “phenomenal” tax reforms. Though Japan’s Nikkei 225 closed flat, the Shanghai composite was up 39.39 points for the day, and Hong Kong’s Hang Seng index closed 0.61 percent higher. The dollar index traded at 100.84 .DXY on Monday, up slightly from its Friday trade price.